CHAPTER V SUMMARY AND CONCLUSION Indian seed industry has shown a significant growth in size and level since its inception. It is growing at the rate of 12 per cent compared to less than 5 per cent growth of global seed market. Both public and private sector companies/corporations are involved in seed production. The private seed sector includes some 20 or so large players (with sales turnover exceeding Rs. 200 million), several medium companies (sales turn over between Rs. 20 million and 200 million), and a large number of small, unorganized players (sales turnover less than Rs. 20 million) with local presence. More than 40 companies have Govt. recognition for their R&D units. The share of private sector in value is greater than its share in volume because of its focus on production of high value hybrids and currently, some 500 hybrids of field crops and vegetables are being marketed, as truthfully labelled seeds, mostly by private seed companies. The response of all other inputs depends on quality of seeds to a large extent. It is estimated that the direct contribution of quality seed alone to the total production is about 15 20 per cent depending upon the crop and it can be further raised up to 45 per cent with efficient management of other inputs. Pigeon pea is mostly cultivated as a secondary or mixed crop throughout the world. It is mainly a tropical crop and different countries on commercial scale, of which India, Myanmar and malaral are the major pigeon pea growing countries accounting for above 85 per cent of the world s production. Historically, India, Myanmar and Nepal have been the key producing countries meeting global requirement. The global production of Pigeon Pea seeds is around 3.25 million tons on an average. The global trade in pigeon pea is in the range 3.4 million tons of a year. The main areas in which tur is cultivated in India are Maharashtra, Uttar Pradesh, Karnataka, Madhya Pradesh and Gujarat. India accounts to a production of 12-15 million tons of pulses and pigeon pea constitutes to around 20 per cent of the share in India. Jyoti Agri Seeds is situated at Junagadh-Dhoraji high-way, Sabalpur, Junagadh. In year 2012-13 company purchased processing plant. It is trying to increase production and selling of its products and also try to upgrade the marketing activities. The
objectives of company are to maintain the quality of its products and maintain the goodwill of company in market. The objectives of the study were as follows 1. To estimate the processing cost of pigeon pea seeds 2. To work out the compound growth rate of sales of pigeon pea seeds 3. To examine the efficiency of working capital management practices 4. To analyze the effect of working capital management on profitability of the firm 5. To identify the problem of seeds companies Jyoti Agri Seeds was purposively selected for the study and it was confined to Junagadh city of Junagadh district because majority people of Junagadh city preferred pigeon pea seeds. Primary data was collected by using well-structured questionnaire given in Annexure-I. It included factors affecting consumer preference like health, past experience, availability, test and price. Secondary data was collected from ten years annual report of the company which included trading account, profit and loss account and balance-sheet. Ratio analysis, correlation and regression were used to satisfy efficiency of working capital management practices. Tabular analysis was used to calculate processing cost of groundnut oil. Ranking method was used to identify consumer preference of pigeon pea seeds. 5.1 MAJOR FINDING OF THE STUDY 5.1.1 Processing cost of pigeon pea seeds. The results indicated that total fixed cost of pigeon pea seeds was amounted to Rs. 9,06,608 with the share of 23.30 per cent in total processing cost. Total variable cost of processing of pigeon pea seeds was Rs. 2,79,43,941 with the share of 76.70 per cent in total processing cost. The different variable cost, the highest cost ( Rs. 2,75,05,633 and 69.63 %) was observed for raw materials followed by taxes (Rs. 59,242 and 2.74%) and power charges (Rs. 3,950 and 1.34%). The total cost of possessing was estimated to be Rs. 2,88,50,549. Gross and net returns were found to be Rs. 3,26,18,695 and Rs. 37, 68,146. The benefit cost ratio observed to the 1.13 per cent. So, well relationship between cost and benefit and project was significantly. 53
5.1.2 To work out the compound growth rate of sales of pigeon pea seeds The Growth rate observed in value term it was 26.99 per cent. The different in growth rate was due to change in price of pigeon pea seeds. The price of pigeon pea seeds was Rs. 44 kg per up to year 2006-07 and after the price per kg of pigeon pea seeds was increase to Rs. 63. All data significant at 1 per cent level of significant. 5.1.3 Efficiency of working capital management practises In year 2015-16 current ratio and liquid ratio of the company were 1.17:1 and 0.86:1 respectively. These ratios were in favourable for the company. It showed that in year 2015-16 current assets and liquidity assets were higher than current liabilities and liquid liabilities of the company. This ratio affected positively to working capital of the company. Debtors turnover ratio was 0.51 days. There is no rule of thumb to interpret this ratio. Analysts can compare the ratio with industry s standard. Generally, a high ratio indicated that the receivables were more liquid and were being collected promptly. A low ratio was a sign of less liquid receivables and may reduce the true liquidity of the business in the eyes of the analyst even if the current and quick ratios were satisfactory. Inventory turnover ratio was 14.80 times in year 2015-16. It means the company effectively replenished its inventory 14.80 times during the course of the year. Working capital turnover ratio was 21.99 times in year 2015-16. It means the company has turned over its working capital 21.99 times in 2015-16. A high working capital turnover ratio is better. A low ratio indicated inefficient utilization of working capital. Return on assets ratio of the company was decreasing continuously. This was not favourable for the company. In year 2015-16 it was zero percent. Company tried to increase return on assets of the company. There were positive correlation between return on assets ratio and current ratio, return on assets ratio and liquid ratio, stock turnover ratio and return on assets ratio, debtors turnover ratio and return on assets ratio. There was highly positive correlation between current assets to total asset ratio and return on assets ratio. Low positive correlation was shown between current liabilities to total assets ratio and return on assets ratio. There were negative correlation between working capital turnover ratio and return on assets ratio. 54
Correlation Coefficient between current assets to total assets and return on assets ratio is statistically significant at 1 percent level and correlation coefficient between return on assets and other ratios are not statistically significant. The liquidity ratio explained 0.86 percent of the variations in return on assets whereas current assets to total assets ratio explained 1.17 per cent of the variations in return on assets. All other ratios had no significant influence on return on assets. It was seen that current assets to total assets ratio clearly and strongly affects and affected return on assets positively. 5.1.4 Effect of working capital management on profitability of the firm. The correlation coefficient between Working capital turnover ratio (0.51) in return on assets ratio and Liquid ratio (0.56) in net profit margin ratio is statistically significant at 5 and 10 percent level and correlation coefficient between net profit margin, return on assets ratio and other ratio are not statistically significant. There was negative relationship between return on assets ratio with current ratio (-0.28) and The net profit margin also negatively correlated with current ratio (-0.35), inventory turnover ratio (-0.03) and Working capital turnover ratio (-0.09) and other ratio is positive. The coefficients for two variables, liquid ratio and working capital turnover ratio, were statistically significant. With 5 per cent increase in liquid ratio 6.53 per cent return on assets ratio increase. With 10 per cent increase in working capital turnover ratio 0.27 per cent return on assets ratio increase. The coefficient for liquid ratio, Debtors turnover ratio, inventory turnover ratio and working capital turnover ratio were positive and significant and indicated the importance of proper management in the working capital management on return on assets ratio from jyoti agri seeds. Current ratio, liquid ratio and debtors turnover ratio is non-significant means not affect return on assets ratio such extent as other ratio affect. 5.1.5 Problems of seeds companies The first and for most problem face by production is fixing price of seeds at farm level followed by quality, transportation, registration of farmer and certification of seeds, and payment to farmers. The most problem face by processing level is Lack of regulation in supply of quality seeds in first rank. Wastage during the processing in second rank followed by labours availability, Unavailability of good packing machineries, Inadequate storage 55
facilities, Government rules and regulations, Irregulation electricity supply and Problem of appropriate processing machinery. The first and for most problem face by distribution is Lack of well selling distribution network followed by timely payments by dealer, price fluctuation, and Loss or wastage during distribution. 5.2 CONCLUSION The project was carried out to economic analysis of pigeon pea seeds with reference to jyoti agree seeds in Junagadh city. It was concluded that processing cost of pigeon pea was Rs. 2, 88,50,549 with the net return of Rs. 37,68146. The benefit cost ratio observed to the 1.13 per cent. So, there was good relationship between cost and benefit and indicated benefit cost ratio show that project was viable. In the Growth rate observed in value term it was 26.99 per cent. The different in growth rate was due to change in price of pigeon pea seeds. There was positive correlation coefficient between Liquidity ratio(0.56), Working capital turnover ratio (0.51), Return on assets ratio was statistically significant at 5 per cent and net profit margin ratio statistically significant at 10 per cent level. The meaning of this positive relation was that with increase in Liquid ratio and Working capital turnover ratio, net profit margin ratio also increase and vice versa. Other ratios were not statically significant. The implies that inventory and debtors turnover ratio majorly affects the net profit of the company than other ratio affects because they were not significant. The coefficients for two variables, Liquid ratio and working capital turnover ratio, were statistically significant in return on assets ratio. The also coefficients for two variables, Current ratio and Liquid ratio were statistically significant in net profit margin ratio. Problem of fixing the price of seeds at farm level, Lack of regulation in supply of quality seeds and Lack of well selling distribution network are major problem in seeds companies. 56